The Detroit skyline is seen on Thursday, July 18, 2013. / Carlos Osorio/Associated Press

Written by

Ann Zaniewski and Nathan Bomey

Detroit Free Press Staff Writers

Detroit’s controversial 13th check got new life Friday when an administrative law judge ruled that one of the city’s two pension funds must be given the right to make retroactive bonus payments to retirees and active employees for 2011 and 2012.

The recommended order — which will be delivered to the Michigan Employment Relations Commission for action — is largely symbolic for now because U.S. Bankruptcy Judge Steven Rhodes may still block the payments.

The trustees of the General Retirement System pension fund could also opt not to make the payments, choosing instead to reinvest the excess earnings.

Administrative law Judge Doyle O’Connor suggested the extra payments could amount to about $174.2 million, though he said the exact figure would require an examination of the General Retirement System pension fund’s performance in 2011 and 2012.

O’Connor signaled earlier this year in an oral opinion that he would side with the Michigan Chapter 25 of the American Federation of State, County and Municipal Employees, which sought to overturn a November 2011 City Council ordinance banning the payment of excess earnings to pensioners.

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Although he sided with AFSCME, O’Connor acknowledged that his opinion might not mean much, saying it “may well offer little more solace than an assurance of a full ticket-price refund offered while still on the sharply tilting deck of the Titanic.”

Detroit attorneys have called the payments a “millstone” that helped drive the city into insolvency.

But the union had argued that the City Council was legally required to seek the 13th check ban through a collective bargaining agreement, and O’Connor agreed. But he also ruled that Detroit emergency manager Kevyn Orr has the power to ban the checks starting in 2013 because he is not legally required to collectively bargain with city workers.

O’Connor’s written opinion was released Friday, his final day of work before retirement. Rhodes had issued a ruling earlier this week allowing O’Connor to submit a written order.

City Council members killed the 13th check in November 2011 after an independent audit the council commissioned found it cost the city about $1.9 billion. The benefit was paid regularly to members of the general retirement fund and at least once to the police and fire fund.

The extra benefits are cited as contributing to Detroit’s bankruptcy filing and to Orr’s contention that the two pensions are underfunded by $3.5 billion.